patrick.net

So there were no holidays last year? Month-on-month data compares 12/05 to 12/04, etc. Both in aggregate, and taken monthly, prices are negative in real terms. My datasources are DataQuick and proprietary data compiled by the economics department of a well known local institution. Perhaps you should look somewhere else for your data than the CAR's largely fraudulent, entirely spun, partial data.

If inflation ticks up, as I suspect, then prices in "prime" areas like the Marina and Marin, Woodside, etc. will not go negative in nominal terms, but they will be very negative in real terms.

Here's an idea "waitingandold" go fuck yourself, whoops, sorry, I meant is the marina prime? Go buy some. Shit fuckhead buy two.

Can someone kindly let me know why the fucking trolls keep on coming? Inflation is around 2%, are you really that fucking stupid? Ok shit for fucking brains, what did gas cost last year? What does it cost now? I hope your fucking SUV bursts into flames. Die piece of shit die.

why bash homeowners so much? It's easy your fucking feces for brains fuck, they aren't "homeowners" they are NAAVLP payers. I wonder how an aluminum bat would sound against your skull. Would it sound hollow or would the shit in your head dampen the sound?

In case you haven’t noticed, inflation is around 2% a year

Funny how RE appreciation has been so far above that.

CPI has been around 2% a year, in national aggregate. BA CPI is quite a bit higher, and accelerating. Even so, the 2% is not the inflation suffered by you and me. We don't have the luxury of excluding fuel, energy, and food from our budgets. If you add that in, RE MoM for Q4 are down in the San Jose Metro census area.

Or then again, maybe your one case of some bozo overpaying in the Marina--who woulda thunk people overpay to live in $hitboxes built on fill--contradict all this actual data.

...and just what are you going to do for a living anyway, after the Open MLS Act passes and people can overpay for Marina properties without paying you a vig?

The Open MLS Act will require, by law, that *ALL* listings are presented in one database which is equally accessible by sellers, buyers, and agents regardless of their affiliation or membership. (1)This will eliminate steering (whereby current MLSs --there are like 50 in CA--eliminate discount brokers or self-sellers). (2) It will eliminate information hiding. Current MLSs have important info in them which they only show agents, not the public. Open MLS will show everyone the same information, including commission rates, days on market, number of times listed, etc.

The FTC asserts that an open MLS system would reduce agent fees by over 50%, nationally. I think this is a conservative number.

WAD you cock sucking little faggot, tomorrow I send all the posts of yours I saved, with all the profanity, and with CSFB's ip address to your fucking manager. You piss of shit, cum gobbling little fucking troll, go back to jacking off to the sears lingerie catalog. Answer this, if you've made so much fucking money on RE, why do you feel it necessary and why do you have the fucking time, you cum gobbling faggot, to waste on a shitty site full of losers like this? Wouldn't that just make you another cum drunk loser? Wouldn't it, faggot?

brightc, do your job as admin, delete the fucking troll posts

WaitingAndOld says:
All I’m saying is that time waits for nobody. Before you know it, you’ll hit 30, 35, 40 years old and you’ll wonder where all the time went.

Well, yeah, happened to me.
Then again, wait a bit longer till you're dead, and then nothing matters anymore. The only thing that matters is how well you've lived your life, and I really can't see a correlation between that and home ownership.
Especially these days.

WAD,
I'm watching financial crisis' unfold in my neighborhood. People that recently bought are in trouble. They had a real positive attitude about buying a house but they ignored the fundamentals. Now they are trying to do a For Sale By Owner in hopes of breaking even. They realize that it takes more than a positive attitude to prevent an ass pounding.

I own a house and believe this market is headed for the shitter

Fuck it, the trolls win, good bye.

WAD,

You are amusing even for a troll. You have failed to counter a single fact presented contradiction your assertions. You make broad assumptions about the RE bears here. I think you'd be surprised to find out what many of us do for a living. In fact, a lot of the regulars are currently home owners who are here to figure out how to best structure themselves to weather the downturn.

I, for one, don't believe you're CSFB. I doubt you even know the first thing about WACC, Black Litterman, or SEC-10e. You come across as a REaltor(tm), complete with your "license" which I'll bet you actually had to take a study course in order for which to pass the "examination".

(but I'm really thinking what surfer-x says; I just like to purty up the language a bit)

ajh, how's melbourne? I'm thinking of applying to a researcher position there.

Per surfer-x's request, trolls' postings will be deleted at sight.

From Patrick's news collection:

http://tinyurl.com/868sp

"The basic median-priced home in December in the county was a 1,540-square-foot, three-bedroom, two-bath home. With a 20 percent down payment, the buyer would spend $3,836 per month for mortgage, property tax and insurance with a five-year, interest-only loan."

My comment: Why the hell are we still evaluating a home purchase using the monthly payment of an interest-only ARM? Haven't people gotten carried so far away they've forgotten buying a home is to stay in there, not to sell it around like having an annual spring garage sale or buying and selling their favorite stocks?

The ARM only makes sense if interest rate were near the bottom, so you can take advantage of the low rates for a few years. It should, and never is, the "workaround" for you to buy a house that's way overpriced which you can't normally afford.

This bubble burst now has spelled the end of the adjustable-rate mortgages. As interest rate keeps climbing, and house prices keep declining, fixed mortgages now make more sense than ever, to insulate you from the post-bubble effects.

Also, from the same article:

"Home prices in San Mateo County continued to fall in December, slipping to their lowest level in nearly a year, a new report released Friday revealed.

The December median price of a single-family home in the county dropped to $819,500, though it was still up a modest 4 percent from December 2004, according to the San Mateo County Association of Realtors.

The median price has plunged more than $100,000 since a record of $921,000 was set last April. The last time the county median price was lower than December was last January, when it hit $783,500.

Prices heated up to record levels in the spring and early summer of 2005, staying at $900,000 or above in April, May and June. They began to tail off in July, when they slipped to a still-whopping $880,000. In November, they dipped to $854,888.

The median price refers to the midpoint, with half the houses selling for more than the median figure and half selling for less.

"To come down that much is significant. That's approaching a 10 percent drop," said Richard Calhoun, a Realtor at Creekside Realty in Santa Clara who also follows the local market. Calhoun said rising interest rates are increasing the cost of home ownership, boosting monthly mortgage rates. While interest rates are still low (around 6 percent) historically, they've headed higher this year.

Many buyers left the marketplace in mid-October, said Calhoun.

Sales fell 13 percent in December compared to December 2004. About 420 homes sold in December, down from 478 in December 2004. Some 472 homes sold countywide in November.

Calhoun noted that the median price could bounce back to $850,000 this month, but "

I don't care what that "but" is gonna say. Just love it when hearing realtors saying home prices going down, but still up x and x percent comparing with the same time last year/last month/previous quarter, whichever convenient for their "statistics". Well, if prices going down faster than a hobbit in a bar fight, I would love to see if they can repeat the same "comparison" a few months later.

Even so, the appreciation rate is rather anemic. Only 4% appreciation? In the "prime" Marin County? Whoa, sure as hell beats the inflation rate of 2% someone just mentioned here, doesn't it?

brightc, thank you ;)

You keep giving 'em hell, surfer-x! :-)

Typical reators' (tm) home value appreciation statistics:

January 2005: House values have gone up 20% since January 2004, and will very likely to continue going up another 20% by the end of this year, then perpetually, forever and ever!

December 2005: House values are tanking, which is somehow a good sign that we're returning to a "normal market". Still, prices are up 10% comparing to the second quarter of 2005!

January 2006: House values are now officially tanked, but we're still up 4% from 2004! Forget 2005, we like 2004 better.

It's must be a good time to apply for an interest-only, one year ARM before house prices go back again in spring!

official gov’t propaganda figure of 2% for inflation

I don't believe we're having a 2% inflation, either. Just went to get some gas today, $2.57/gallon at the Shell station in San Jose. Last year, the price was $2.37/gallon, so it's about 8.5% increase. The 2% inflation is truly out of touch.

I've heard they've excluded energy and food out of the inflation calculation because we all accept to get screwed to get these items anyway. Too bad San Mateo house values only increase 4% from December 2004. Boy, how can you buy food and gas with this kind of equity appreciation? Hope I'm not sounding too desperate! :-)

Surfer-X,

I have pals and family down in Melbourne. Shoot the questions this way, will try to answer as much as I know.

CPI has become oxymoronic. It is no longer primarily a *consumer* index. In fairness to the government, there are quite legitimate economic reasons for this shift. Mainly, the many forms of annuity expenses that have been linked to CPI, like pensions, business contracts, and entitlement payments. However, the inflation measure for governments, businesses and other organizations requires a different mix (like exclusion of energy, food, and other inelastics). People, however, can't exclude these costs.

The true FPI (family price index) is closer to 6% by most figures I see. Some go as high as 10%, but most of that relies upon wage inflation which isn't high enough in the BA to carry our local FPI that high.

No matter how you slice it, RE prices in the BA are trending negative in real terms. We may see negative nominal trends by the end of this year, but not if we finally get enough wage inflation. Instead we may see flat nominal prices in RE, but a more rapidly decreasing real price.

I like to remember the saying: "Inflation is the cruelest tax of all". People don't usually get it. They think they're getting ahead because their paycheck is going up. But they are "getting it", just in the wrong end.

BSAS EXPAT
Went to this arts musem on liberdad ave. saw the painting by lucogiardino,
the mathemetician. this is a painting of an elderly lady but with so much poise and dignity. also saw "elgreco". then as i was coming back i heard this chants in the recoleta church.
I saw so many old people there praying.
these people can hardly move but there is the faith.. I have seen that same thing in the old people when they come to the temples in India. The services were in spanish which I can hardly make out. There are these clositers which were used by the ?fransiscan monks. Do u know any small book that i can easily read and comrehend about their life? BTW i got a small book about evita peron in english. I am going to read it.
thanks for the suggestion about tigre. it has been raining so much that i cannot do anything except may be go to the museums.

Help me with the inflation number. Does the government once a year publish the number including gas, etc. to adjust Social Security? This would not be the artificial "core" rate that no one experiences.

The Federal Reserve banks publish CPI data. FRED from the St. Louis fed lets you download different filtered datasets, or take the entire set. I think they publish it monthly, but there is daily data in the downloads.

You have to check each entitlement program to figure out just what period and formula it uses to index inflation. But most all of them are linked to CPI or a derivative of CPI.

ReneeInSF

Save all the cash you can and be very long term patient before you decide to move up to a condo. The housing market in Japan has been declining for 15 years from 1990. So, wait, wait and wait some more. You will need a good credit history and maintain your employment for the consolidated remaining banks to give you a mortgage when you want it.

The home buyers in SF and through out Southern California have taken out interest only or option ARM mortgages on 1/3 up to 1/2 of sales. Plus, the equity of current owners has been removed by HELOC's, etc. With a drop in value from the peak price of say 20 percent, all these heavily in debt owners in Southern California will not be able to refinance their homes.

The downhill avalanche will follow the ripple effect of lost construction, insurance, service sector and major purchases in Southern California.

Cold feet will put the entire new inventory and soon to be inventory under water. Foreclosures and bankruptcies will follow.

One can not refinance without equity. A drop of 20 percent wipes out the equity of the I/O's and option ARM's. Equity in conventionally mortgaged homes has been dropping severely for cars, vacations, education etc. Borrowing against homes added $600 billion to consumers' spending power in 2004, according to research by Federal Reserve Chairman Alan Greenspan.

Refinancing will be dead.

ReneeInSF,

Many here have faced similar decisions to delay a purchase, sell and rent (like me), or simply sell vacation homes/investment properties. It's a scarry step to take, especially when the mainstream is blasting "buy now or be forever regretful" in your ear.

There was a time, not to long ago, when .18 - .25 of your gross income was considered a full burden to pay for ownership (including taxes, insurance, interest and mortgage). Even today I wouldn't recommend anything north of .33; .50 is way way too much. Your exposure could well have turned out to be a financial catastrophe.

If you want to protect yourself against further home price inflation, then just pretend you bought the place and put the difference in a fund that will meet or beat inflation (preferrably one with a low/no tax profile, like a tax free Muni). You won't make any windfalls that way, but you'll go a long way towards plugging the gap in any upside that might be left in the RE market before it corrects in your target purchase area. (And despite what you might read here, don't run out and by gold for crissakes, lol)

If the price of the home goes down 10% you’ve lost half your investment, if it goes down 20% you’ve lost 100% of your down payment!

In the spirit of fairness, there is a time factor. If you are one of those extremely rare people who view their house as a homestead--one in which you will likely live out most of the rest of your life--then the above does not apply. However, very few people in any major metro area fit this profile anymore. But, if you plan on living there for 25-30 or more years (long enough to actually own the place), then you only need to worry about paying the mortgage, not about the equity position.

Is there a chance San Francisco houses will experience much longer time in market, thus will reduce in prices dramatically? The reason is that I'm seeing SF as less and less a place desirable to live.

Before everyone's jumping on me, here are my reasons:

1. San Francisco is a nice, if not outstanding, place to visit, but not a desirable place to raise a family, while most homebuyers are those who want to settle down and raise a family. The school system is terrible, and unless you live in a rich neighborhood (which automatically means you can afford private schools for your kids and shield yourself away from the disgraceful SF public school system), you'll have to deal with pesky problems like your car windows getting smashed, your car getting dented by people's first attempts to parallel park, and occassionally, you're followed by one of those friendly homeless guys who want to share their intimate knowledge of the streets with you.

2. As a young person, your dream may be living in a metropolitan place, where all the actions are. However, your dream could be killed pretty fast after circling the whole ten blocks trying to find a parking spot just to get your takeout food, renting a Blockbuster movie (I know, they have online service now, but what if you suddenly want to see Demi Moore one particular night), or even grocery shopping. Finding a parking spot in my South Bay neighborhood's (Rivermark) Safeway at 5 PM Sunday evening is already a problem. SF must be worse than that. I don't know about you, but I hate driving around to find a parking spot in the street, and the only people coming out have absolutely nothing to do with parked cars.

3. Crime. Need I say more? I'm not talking about living in bad neighborhoods. Just a so-so, middle class one, Civic Center, maybe? Still, car window smashing and homeless problems are still prevalent. Last thing I want to do is to go home after work, and revisit my thought about whether I should go buy a pistol and learn how to shoot.

I do not know much about SF, but those are just some impressions I have from many times visiting the city. I used to date a girl living near the Civic Center. To me, SF has too many problems for families, and because homebuyers are the type that wants to have a stable family, I can see the demand for SF properties declining and fast.

This is off the current topic but too good not to post! I just got home, flipped on the tube, and this guy Russ Whitney has an infomercial on KRON4 all about property flipping. He just said "Let me show you how I took $1,000 and turned it into $4.7 million in less than 18 months!" Ha ha ha ha ha! Then he had some fat lady named Diana from Texas talking about how great his program is, and she says "now I'm making the money I not I only want, it's the money I DESERVE." Yes you deserve everything you've got coming to you honey.

Randy H

The downhill avalanche of collapsing home equity will cause the ripple effect of lost construction, insurance, service sector and major purchases.

Even if your personal equity is irrelevant because you just plan to live in your house forever, you won't escape the deflation or stagflation.

Then he had some fat lady named Diana from Texas talking about how great his program is, and she says “now I’m making the money I not I only want, it’s the money I DESERVE.”

I guess it's not over until the fat lady sings.

Even if your personal equity is irrelevant because you just plan to live in your house forever, you won’t escape the deflation or stagflation.

I agree. However, I am assuming that your ownership burden is between .20-.30, which means it will be equivalent all things considered to renting, especially in an inflationary environment (rents are less sticky than housing prices and alternative returns are diminished by inflation).

In a deflationary environment it is true that renting would be preferrable, that is if you're willing to suffer the changes in ownership that will occur in the rental properties. I guess if you only rent in a large corporately owned complex, and stay away from individual owners, then you'd be pretty well off.

Like I said, if you can afford your PIMI for 30 years, then infl/defl won't matter in the short-run. Most people don't fall in that category, myself included.

I guess it’s not over until the fat lady sings.

Hilarious! Or, "it’s not over until the fat lady cries". :lol: :lol: :lol:

If the fat lady is dead, is it finally over?

HARM wrote: the fat lady cries

Cry Me A River
by Justin Timberlake

You were my sun
You were my earth
But you didn't know all the ways I loved you, no
So you took a chance
And made other plans (like flipping condos)
But I bet you didn't think your thing would come crashing down, no (you haven't heard about the housing bubble, have you?)

You don't have to say, what you did,
I already know, I found out from him (the collection agent. Damn, they don't respect anyone's privacy.)
Now there's just no chance, for you and me, there'll never be
And don't it make you sad about it

You told me you loved me
Why did you leave me, all alone (the house is foreclosing, honey. I'm finding a motel)
Now you tell me you need me
When you call me, on the phone (are you fucking crazy? I'm avoiding the bill collectors like the plague. No phone!)
Girl I refuse, you must have me confused
With some other guy (I must have pretty good disguise, and I'm already fat, so it helps)
Your bridges were burned, and now it's your turn
To cry, cry me a river
Cry me a river-er
Cry me a river

Now, now, let's not be too cruel with our schadenfreude, Randy. ;-) Besides, it's MUCH more entertaining watching f@cked borrowers writhe and squirm as they go down in flames than merely having them keel over and croak. :mrgreen:

DinOR

The California Department of Real Estate announced that the number of real estate agents approaches 500,000. Using the census, this works out to 1 real estate agent for every 75 Californians.